Friday, 22 April 2016
ICOMP on Statement of Objections against Google Android
“ICOMP is confident competition authorities everywhere are catching on how Google works. The Android strategy to lock in consumers is similar to other Alphabet Google products under investigation: undercut competitors by dumping Android free of charge to make it dominant, tie and bundle Google products with Android, block the best screen space with Google apps.”
Michael Weber, Chairman of ICOMP the Initiative for a Competitive Online Marketplace
Smartphones and tablets have become part of the lives of most Europeans. Google dominates this market through its ownership or control of the Android operating system as well as a range of apps and online products. Android devices are central to millions of EU citizens’ daily movements, their planning, and decision making. These devices collect masses of personal data. Where you go, what you look for online and what you are interested in is all tracked and stored. Data about these things is only valuable in context. Google probably has more context relevant data than any company on the planet. Android provides the platform, Google search then tracks internet searching and browsing, and use of Google apps follows your daily needs and captures your data. All are valuable sources of information for advertising. It’s a very successful strategy. With a market cap over $547 bn Google earlier this year overtook Apple as the biggest company in the world, bar none.
Overall, from its position of unrivalled market power, Google controls and manipulates users’ demands. Android is a cornerstone of the Google edifice. However, Android ceased to be a truly open source platform some time ago. Google’s agreements with phone manufacturers mean that Google apps are always on the home screen of Android devices, in front of the customer, straight out of the box. Exclusivity agreements and the Android Compatibility Program is used as a club to make phone manufacturers do what Google wants. Top positioning and display of Google products is used to steer consumers towards Google’s own products and services. Google’s control and manipulation of demand bolsters its position in markets for apps and what they are used for.
In short Google rigs the system so that Google apps, not necessarily the best apps for consumers’ needs, are put in front of people ahead of those of its competitors.
Commissioner Vestager’s latest measure, to send a Statement of Objections (SO) to Google about its Android platform, is a significant step in the long running formal investigations. An SO cannot be dismissed as a mere preliminary matter – it is the product of considerable investigation, and detailed analysis of large amounts of factual evidence. An SO almost always leads to a considerable fine and, we hope more importantly, to significant changes in the defendant’s business practices.
The EC’s mission is a public interest one. It is required to safeguard consumers and make sure that markets are open and competition takes place on the merits of the products people may need. The Commission’s step in taking formal proceedings, by issuing a further SO, recognizes the high stakes involved at the present time as more and more people become digitally dependent.
As the main player in the digital world Google has embedded itself in an increasingly interconnected EU industry. It has already extended its dominance in online search to mobile. Absent vigilant EU competition enforcement, Google has swiftly monopolised access to many markets and, looking forward, is on path to monopolise an ever larger slice of the European economy.
All sorts of devices are increasingly interconnected over the web. Smartphone and Smart TV media and entertainment are early examples. Google News is promoted over more popular news rivals. Google is a broadcaster and through YouTube provides a channel that can be accessed on smart devices everywhere. It can be expected to promote its own products in its own interests to smartphone users over other broadcast and film content. It has recently supported the US FCC moves to replace the set top box. Its system could well become the navigation system for users’ decisions over their choice of programs and films on any smart device. We currently regulate electronic program guides in the EU, in the public interest to ensure cultural diversity and support the public service missions of our national broadcasters. Imagine the Digital Single Market where all national telecoms companies and broadcasters are beholden to Google’s decisions over their visibility. At the top of the Commssion’s Digital Single Market policy proposals are issues over geo-blocking and access to programmes, football and films from different member states. Our cultural diversity rules and policies about media ownership and control also need to be understood in terms of the new digital reality.
Google’s central position on smartphones and smart devices also allows it to affect user choices over many other industries. The economy is shifting to industrial use of the Internet, known as the Internet of Things. For example, Google is a short step away from becoming central to peoples’ decisions over their choice not only of mobile services and media and telecoms suppliers, but of payments systems and products controlled by, accessed from and bought through smart devices. This may affect our choices for everyday essentials in addition to telecoms, such as groceries and energy, in fact anything where the smart device is the interface to the web.
The Commission has recognised that a truly Digital Single Market is at the heart of the European economy. A healthy economy needs a healthy heart. This means one that functions effectively for users, and industry, alike. We believe that Google is close to the heart of the economy and restricts its proper functioning. The entire system needs to be robust and the body of the economy needs to be competitive. For this to happen, Google needs to operate openly, transparently and in a non discriminatory way, in the wider public interest.
ICOMP’s members represent a wide range of interests in the digital sphere, and seeks to promote a healthy and vibrant EU economy. Our membership not only welcomes this SO but the Commission’s on-going investigation and potential extension of the Statement of Objections in the context of the EU economy and its policies to ensure its effective functioning in the future.